"The board governance fad is being kept alive by a bunch of consultants and academics ... there is no evidence that board governance matters to shareholders. When I see some evidence, I’ll take this more seriously."

So says the CEO of a Fortune 500 company—and he is not alone in his skepticism. Though there are some CEOs who firmly believe in the importance of good board governance and have taken steps to strengthen their company’s governance processes, many others remain doubtful about the benefits of taking action. "So many other things matter more—competitors, financials, marketing—board governance is just not on my screen," said one CEO. Another argued, "Fund managers are very short-term oriented; not much use talking about boards with them—it’s too long-term an issue."

To try and ascertain the real worth of good governance, McKinsey, in conjunction with Institutional Investor, Inc., conducted a survey of over 100 major investors, CEOs, and senior executives. According to the survey findings, good governance practice really does make a difference—a difference that many investors are willing to pay for.

(See the boxed insert for details of the survey.)

Just how much is good corporate governance worth?

We asked investors to compare...